Proxy War on For-Profits

03/04/2014

A proxy war over the regulation of for-profit colleges is being waged in the editorial pages of The New York Times.

In the last week the newspaper has published four opinion pieces that touch on federal oversight of the industry -- two in favor of tightening the screws and two (by the same columnist) defending for-profits for their role in educating underserved students.

The flurry of punditry comes just before the U.S. Department of Education is expected to release its final draft "gainful employment" rules for vocational programs at for-profits and community colleges. It also relates to broader debates over how to treat the for-profit sector in President Obama's proposed college rating system and in the eventual Congressional reauthorization of the Higher Education Act.

As a result, both critics and supporters of the industry appear to have pled their case to the gatekeepers of what is arguably America's most prominent forum for debate.

On Saturday the Times ran an excerpt from a new book by Suzanne Mettler, a professor of history at Cornell University. Mettler's book is titled Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream. In the excerpt she takes Congress to task for the "polarized plutocracy" that led to its support of for-profits, which she notes are heavily dependent on government funding.

"By the late 1990s, Republican leaders championed the for-profits as the 'private sector,' " Mettler wrote, "never mind that 15 of the large publicly traded for-profits receive on average 86 percent of their revenues from federal student aid."

Some Democrats also signed on, she said, thanks to the industry's lobbying and campaign contributions.

"The result? In the House of Representatives, where Democrats and Republicans agree on almost nothing, they have united to protect $32 billion taxpayer dollars for the for-profit college industry," she wrote.

Andrew Kelly, director of the Center of Higher Education Reform at the American Enterprise Institute, is a big fan of Mettler's writing. But he said she is mistaking the "plutocracy" for old-fashioned constituent influence.

Some of the Democrats who broke ranks in the House on for-profits come from urban districts, Kelly said, which are home to large minority and low-income populations that those institutions tend to enroll. And for-profit campuses are common in urban districts.

"Members of Congress tend to represent the interests of the organizations in their district," Kelly said in an email. "And those organizations tend to contribute money to incumbents who are up for reelection."

Mettler criticized the Apollo Group, which owns the University of Phoenix, the largest of for-profit institutions. Mark Brenner, Apollo's chief of staff, fired back, saying a "majority of today's students deserve opportunities and flexibility that sometimes-inaccessible, elite institutions simply don’t provide."

'Menace' or 'Indispensable'?

Mettler's book excerpt calls for the feds to step up with tighter regulation of for-profits. Echoing her was Brent Staples, an editorial writer for the newspaper.

Under the headline "The Robber Barons of the For-Profit College Sector," Staples' column last week said bad actors in the industry represent a "menace" that requires more federal oversight.

Citing investigations by the Consumer Financial Protection Bureau (CFPB) and attorneys general in 32 states, Staples said some for-profits "saddle students with crushing debt while furnishing them useless degrees – or no degrees at all."

Ouch.

Advocates for the industry have been able to stir up some support in the newspaper, however.

Marc Jerome is executive vice president of Monroe College, a small for-profit with campuses in the Bronx and New Rochelle, N.Y. He was also on a federally appointed negotiating team that failed to reach consensus in December on proposed gainful employment metrics.

Jerome landed a prominent role in a sympathetic opinion piece that Eduardo Porter, a Times columnist, wrote last week. Porter wrote that Monroe's graduation rates beat that of nearby community colleges. Monroe also fares well on job placement and loan default rates, Porter reported.

He cited Jerome's claim that for-profits have been unfairly targeted by the feds. And, while exploring both sides of the gainful employment issue, Porter appeared to side with Jerome on for-profits being "indispensable" for serving poorer, more diverse students than traditional colleges.

"The United States must satisfy a growing demand for higher education, particularly from low-income students," concluded Porter. "If for-profit colleges are discouraged from fulfilling it, somebody else has to."

PR and Lobbying

The Education Department has submitted its gainful employment rules to the White House's Office of Management and Budget. The final product could emerge any day, where it will then face a round of public comments.

PR campaigns probably won't stop gainful employment, given the time and effort the department has put into creating them. A lawsuit might. And sources said for-profits are likely to sue to knock down the regulations, as they did successfully with a previous iteration.

But both critics and supporters of for-profits are angling for the feds to alter the final proposal in their favor. So they have met with White House officials and taken to editorial pages.

Noah Black, a spokesman for the Association of Private Sector Colleges and Universities (APSCU), which is the primary for-profit trade group, said the Times's commentary section has been "incredibly biased" against the sector.

"Opinion columnists educated at elite, private institutions have questioned why our nation should provide students historically underserved by traditional higher education with the opportunity to access federal financial aid and attend an institution that meets them where they are in their career," Black said via email. "Our hope is the administration will not be swayed by the elitist opinions of the Ivory Tower, but rather consider the fact that the gainful employment regulation will cut off access to postsecondary education for millions of students looking to prepare themselves for in-demand careers."

Carrie Wofford is a former Democratic staffer on the U.S. Senate's Health, Education, Labor and Pensions (HELP) Committee who now helps lead a nonprofit group seeking stronger protection for students who are veterans of the U.S. military.

In contrast to the Staples and Mettler pieces, which Wofford said were "appropriately heavy on the facts," she said Porter made a few incorrect assumptions.

For starters, while Wofford said Porter was correct to say for-profits could offer innovative educations, she cited a voluminous Senate investigation which found that they rarely spend a large portion of their budgets on academics.

"Many students at for-profits complain that the education they receive is out of date and not up to the standards employers expect," Wofford said in an email. "That's a spending choice for-profits make."

Porter may have stepped on a few toes by giving Jerome a platform to criticize community-college graduation rates. APSCU's president and CEO, Steve Gunderson, has promised to avoid that sort of cross-sectoral squabbling. But Monroe isn't a member of the association. And Jerome talked about low completion rates at community colleges often during the negotiated rulemaking sessions.

"He took every opportunity to criticize our institutions," said Jee Hang Lee, vice president for public policy and external relations at the Association of Community College Trustees (ACCT).

Lee said Jerome and Porter relied on "myopic" data to criticize community college-graduation rates. Federal databases only count first-time, fulltime students, which are small portion of total enrollment at most community colleges.

Kelly, however, said he thought Porter did a good job summing up the for-profit dilemma in Washington.

"Policy makers are frustrated by the outcomes at for-profit colleges and rightfully annoyed about abuses within the sector," Kelly said. "But these colleges do occupy an important slice of the higher education market, especially in an era of tight public budgets and training that is more tightly linked to the job market."